Are you, the dental practice, a holder of unclaimed property?
A dental practice may be the holder of unclaimed property. However, most practices do not understand what unclaimed property is nor are aware of the rules and regulations. These rules and regulations do apply to dental practices, along with other businesses. This article will begin with defining unclaimed property as it pertains to a dental practice and proceeds to discuss how this area of compliance may affect your practice and how to become compliant.
What Is Unclaimed Property?
Unclaimed property is money or assets held by your practice, and you are not the rightful owner of that property. The most common form of unclaimed property in a dental practice is patient credit balances. These patient account credit balances typically occur when a patient pays an estimated portion at the time of service. Their dental benefits plan reimburses a higher amount than expected, or the dental plan has made an overpayment. Patient overpayments should only be held on the account as a credit toward future procedures unless the patient requests explicitly the credit be held. It is advisable to have a signed document in the patient’s record, indicating the patient has granted permission to keep the money for future treatment expenses.
Managing Unclaimed Property
Each state has legislation regarding unclaimed property and its unclaimed property division. What many dental practices fail to realize is they may assess a penalty for non-compliance. To learn about your state legislation and state-specific regulations, visit the National Association of Unclaimed Property Administrators website at www.unclaimed.org. While states have their requirements, there are some commonalities among states. Those are:
- Holding period (dormancy period)
- Annual reporting deadline
- Due diligence requirement
Steps should be taken in preparation to comply with your state unclaimed property laws. First, determine if you have unclaimed property. Generate and review an accounts receivable report of credit balances. An account analysis should be performed on each patient account with a credit balance to determine if there is a real credit balance and to whom the credit belongs. For all accounts where there may have been more than one plan, and the provider is in-network with one or more of those plans, check to see that any PPO adjustments were applied correctly. It is not uncommon to find errors, and the result is the error is monies belonging to the practice (i.e., PPO write off applied twice, etc.). When the conclusion is that an actual credit balance exists – does it belong to the patient or the insurance payer? If the credit does not belong to the practice, it is typically subject to unclaimed property rules of your state.
Once you identify the unclaimed property held by the practice, the next step is to determine the holding period of that property. The holding period is the amount of time the property (credit balance) is held. Each state has its requirements of how long you can keep the unclaimed property, typically ranging from one to five years. Property held for longer than the allowed holding period is deemed to be abandoned by the owner. For the dental practice, this would be any credit balance held on an inactive account for longer than holding period as defined by your state.
Now that you’ve identified the practice’s abandoned property, you must comply with the statutory requirements of your state. It is essential to understand your state’s requirements regarding values and time periods that apply to unclaimed property. States also have defined time frames outlining when the various steps are performed.
Attempt to contact the patient in writing, mailed to the patient’s last known address. If the attempt is unsuccessful, and the property remains with the practice, the unclaimed property should be reported and remitted to the state. Most states have adopted the uniform reporting format of the National Association of Unclaimed Property. Also, most have selected an annual reporting deadline of November 1 for all property abandoned after the holding period. Abandoned funds are remitted with this report filing.
Take the necessary steps to become and maintain compliance. If the practice does not currently report or remit unclaimed property to the state, now is the time to become compliant. There are non-compliance penalties, such as the state assessing what it “determines” to be the estimated amount of unclaimed property held by the practice. These penalties can be much higher than actual unclaimed property amounts of the practice.
As states continue to identify sources of non-tax revenue, the unclaimed property issue will continue to increase. Familiarize yourself with your state’s requirements and implement any necessary systems in your practice to follow those requirements to avoid possible penalties or audits. Some states are auditing dental practices for unclaimed property.
Be proactive in refunding patient credit balances while you maintain contact with the patient. Generate and review a credit balance accounts receivable report at least every 90 days. Maintain current contact information for each patient, including the proper mailing address. Note, an in-network provider should refer to your processing policy manual as most likely, you will find language indicating you are required to reconcile any overpayments made by the patient promptly after a claim has paid.